Excerpt: - - the defendant failed to deliver the goods and the plaintiffs instituted a suit in the west hartlepool county court, having first obtained leave under section 74 of the county courts act......two matters on which the plaintiff can rely in contending that a part of the cause of action took place in calcutta. one is that his offer was sent from calcutta by a cable to london, and the other is that he rejected the goods which he did by sending the defendants a communication from calcutta or by informing their representative in calcutta.9. the learned chief justice did regard the making of the offer by cable from calcutta as part of the cause of action and the rejection of the goods in calcutta as also a part of the cause of action. there is only one common factor in that case and the case now before us and that is that the suit was instituted in the place from which the accepted offer was sent. the other facts are very different. the contract in the calcutta case was a c.i.f......

Judgment:

Alfred Henry Lionel Leach, C.J.

1. The, question raised in this appeal is whether a cause of action arose in part within the original civil jurisdiction of this Court. The appellants are a firm of hide merchants carrying on business in Hyderabad, Sind. On the 21st April, 1937, the appellants telegraphed to the respondent, who is a merchant carrying on business at Madras and at Madhavaram, offering to sell him 5,000 sheep hides of a certain quality at the price of Rs. 128 per 100 skins, delivery to be given at the railway station in Hyderabad. The respondent by a telegram of the same date made a counter-offer. He informed the appellants that he was prepared to accept the hides at the price of Rs. 125 per 100 skins. This counter-offer was accepted by the appellants by telegram the next day. On the 4th May, 1937, the appellants made an offer to the respondent in respect of another parcel of hides but of a different quality at the price of Rs. 80 per 100 skins. Here again, the respondent made a counter-offer. On 5th May he telegraphed saying that he was prepared to buy at the price of Rs. 75 per 100 skins. This counter-offer was accepted by the appellants by a telegram despatched from Hyderabad on the 7th May. The prices given were for Hyderabad railway station and therefore the respondent under the terms of the contract was bound to take delivery at Hyderabad. This was not convenient and at the respondent's request the goods were forwarded to Madras via Karachi through a firm of forwarding argents. The arrangements in this connection must be taken to be the arrangements of the respondent. Both consignments duly arrived in Madras and were taken by the respondent to his tannery at Madhavaram, where they were unpacked and inspected. The respondent considered that the goods were of inferior quality and he decided to reject them, which he did by a letter posted from Madras. The appellants denied that the goods were of inferior quality and refused to take them back. The result was that a suit was filed on the Original Side of this Court by the respondent for damages for breach of contract.

2. In the plaint the respondent averred that part of the cause of action arose in Madras:

where the offers were made, wherefrom the sum of Rs. 7,500 was remitted to the defendants and the breach of the condition of the goods was ascertained and the goods were rejected.

3. Under Clause 12 of the Letters Patent the Court has jurisdiction to try a suit in which the cause of action partly arises within the local limits of the ordinary civil jurisdiction of the Court, provided leave is first obtained. The respondent applied for and obtained leave to file the suit. The appellants, having been served with the summons, asked for the revocation of the order granting leave. The application was heard by Gentle, J., who rejected it. The appeal now before us is from that order. The learned Judge held that the case fell within the decision of the Calcutta High Court in Engineering Supplies, Ltd. v. Dhandhania & Co. I.L.R. (1930) 58 Cal 539, which he considered was not in conflict with the decisions of this Court in The National Insurance Co., Ltd., Calcutta v. Seethammal : AIR1933Mad764 and Kamisetti Subbiah v. Katha Venkataswamy I.L.R.(1903) 27 Mad. 355. As I do not share the opinion that the decisions of the two Courts are in harmony it will be necessary to examine these cases, but before doing so, I consider it desirable to refer to two English decisions which have bearing on the appeal.

4. The first of these cases is Read v. Brown (1889) 58 Q.B. p. 120, in which the Court of appeal (Lord Esher and Fry and Lopes, L. JJ;) defined 'cause of action' as comprising every fact, which if traversed, it is necessary for a plaintiff to prove to entitle him to succeed. This definition has found general acceptance. The second case is Clarke Brothers v. Knowles (1918) 1 K.B. 128, in which it was held that where a contract is made by an offer and acceptance sent through the post between parties residing in different County Court districts the posting of the offer is not part of the cause of action within the meaning of Section 74 of the County Courts Act. That' section corresponds with Clause 12 of the Letters Patent of this Court. Under it an action or matter may be commenced by leave of the Judge or registrar in the Court in the District of which the action or claim 'wholly or in part arose.' In that case the plaintiffs, who carried on business at West Hartlepool bought from the defendant, who carried on business at Croydon, a quantity of glass and scrap wire. The contract was made entirely by correspondence through the post. The defendant failed to deliver the goods and the plaintiffs instituted a suit in the West Hartlepool County Court, having first obtained leave under Section 74 of the County Courts Act. It was contended by the plaintiffs that inasmuch as their offer which the defendant accepted was made in a letter posted in West Hartlepool part of the cause of action arose there. Lawrence and Lush, JJ., were emphatic in their opinion that the posting of the offer was no part of the cause of action. Lawrence, J., said:

The making of an offer is part of the cause of action, but an offer is made where it is received, and that in this case was at Croydon.

5. The words of Lush, J., were:

The material question is not where the offer was sent from but where it was made, and the making of the offer is proved by showing that it was received.

6. I will now turn to the decisions of this Court referred to by Gentle, J. In The National Insurance Co., Ltd., Calcutta v. Seethammal : AIR1933Mad764 , the question for decision was whether a contract of insurance had been effected in Madras or in Calcutta. The proposal for a policy was made in Madras through a local agents who had no power to accept it. It could only be accepted at the office of the Insurance Company in Calcutta. The proposal for, the policy was posted from Madras and it was contended that the contract must therefore be deemed to have been made Here. The Court negatived this contention and relying on Clarke Brothers v. Knowles (1918) 1 K.B. 128, held that an offer made through post is made in the place where the offer is received.

7. The case of Kamisetti Subbiah v. Katha Venkataswamy I.L.R.(1903) 27 Mad. 355 was one under the Code of Civil Procedure, 1882, and is not really in point. Under that Code a suit had to be filed in the Court within whose jurisdiction the cause of action arose; or, all the defendants 'at the time of the commencement of the suit, actually and voluntarily resided, or carried on business, or personally worked for gain; or any of the defendants, at the time of the commencement of the suit, actually and voluntarily resided, or carried on business, or personally worked for gain: provided that in the last case the leave of the Court was given, or the defendants who did not reside, or carry on business or personally work for gain, acquiesced in the institution of the suit. There were three explanations to the section. The third explanation stated that in suits arising out of contract, the cause of action arose within the meaning of the section at the place where the contract was made, or the place where the contract was to be performed or performance thereof completed, or the place where in. performance of the contract any money to which the suit related was expressly or impliedly payable. The corresponding section in the present Code, Section 20 follows the lines of the Letters Patent and says that a suit shall be instituted in a Court within the local limits of whose jurisdiction the cause of action, wholly or in part arises. It was held in Kamisetti Subbiah v. Katha Venkataswamy I.L.R.(1903) 27 Mad. 355, that the contract was made in Madras, where the plaintiff's proposal - sent by post - came to the knowledge of the defendants and where the defendant's acceptance was posted. What the Court had to decide was where the cause of action arose, not whether it arose partly in one place and partly in the other, and on the facts of the case it came to the conclusion that it must be deemed to have arisen in Madras.

8. The question in Engineering Supplies, Ltd. v. Dhandhania & Co. I.L.R.(1930) 58 Cal 539 was whether the Calcutta High Court had jurisdiction to try a suit for breach of contract made between a Calcutta merchant and an English company for the supply of goods. The offer was made by cablegram to London from Calcutta and accepted by cablegram from London. In accordance with the terms of the contract the goods were sent to Calcutta, but they were rejected because they were said not to be of the specified quality. It was held by Rankin, CJ. and Ghose, J., that the Calcutta High Court had jurisdiction to try the suit as part of the cause of action arose therein. The respondent in the present case has laid great stress on the following passage in the judgment of Rankin, C.J.:

There remain two matters on which the plaintiff can rely in contending that a part of the cause of action took place in Calcutta. One is that his offer was sent from Calcutta by a cable to London, and the other is that he rejected the goods which he did by sending the defendants a communication from Calcutta or by informing their representative in Calcutta.

9. The learned Chief Justice did regard the making of the offer by cable from Calcutta as part of the cause of action and the rejection of the goods in Calcutta as also a part of the cause of action. There is only one common factor in that case and the case now before us and that is that the suit was instituted in the place from which the accepted offer was sent. The other facts are very different. The contract in the Calcutta case was a C.I.F. contract under which the goods had to be delivered in Calcutta. In the present case the contract is a F.O.R. contract under which the sellers were bound to deliver only at the Hyderabad railway station. I may say in passing that in the present case we have only been asked to hold that the Court has jurisdiction because the offers were made from here and the goods were rejected from here. No point has been made of the fact that money was remitted from here to Hyderabad in payment of the goods.

10. With the greatest respect for what was said in Engineering Supplies, Ltd. v. Dhandhania & Co. I.L.R.(1930) 58 Cal 539, I am unable to agree that the posting of an offer or the despatch by telegram of an offer from a particular place can be regarded as part of the cause of action. The making of the offer has to be proved in order to entitle a plaintiff to succeed in such a case as this, but the offer is made at the place where it is received and if it is made by post or telegram the place of despatch is not a material factor. The case of Clarke Brothers v. Knowles (1918) 1 K.B. 128, apparently was' not considered in Engineering Supplies, Ltd. v. Dhandhania & Co. I.L.R.(1930) 58 Cal 539. A As I have indicated, it was considered and accepted in The National Insurance Co., Ltd., Calcutta v. Seethammal : AIR1933Mad764 and that being a decision of a Bench of this Court is binding on us. For the reasons indicated I hold that part of the cause of action in this case did not arise in Madras by reason of the fact that the respondent sent from here his offers by telegram.

11. The only other point to be considered is with regard to the rejection of the goods. The rejection does undoubtedly form part of the cause of action, but if the place of rejection is material it was not at Madras. It was at Madhavaram where the goods were sent for examination. The respondent had to communicate his decision to the appellants but the fact that he did so through a letter posted in Madras did not make Madras the place of rejection. The notice of rejection must on the authority of Clarke Brothers v. Knowles (1918) 1 K.B. 128, be taken to have been given in Hyderabad where the letter was received. In my opinion the place of rejection was not material. In order to succeed the respondent has not to show where he rejected the goods, but that he was entitled to reject them because they were not of contract quality.

12. It follows that in my judgment the cause of action did not arise even in part in Madras and consequently the Court has no jurisdiction to try the suit. In these circumstances the appeal must be allowed and the permission to sue in this Court revoked. The plaint will accordingly be taken off the file of the Original Side. The appellants are entitled to their costs here and below.